European Central Bank repeats its 2012 stance on digital currencies

At a speech in Rome yesterday, Yves Mersch of the European Central Bank reiterated the bank’s stance on cryptocurrencies from 2012, but warned that such currencies should not be ignored.

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At a speech in Rome yesterday, Yves Mersch of the European Central Bank reiterated the bank’s stance on cryptocurrencies from 2012, but warned that such currencies should not be ignored.

Essentially, Mersch’s comments were that digital currencies were still too small to be of any consequence at the moment — a key part of the Virtual Currency Schemes report from October 2012, when bitcoins were trading for tens of dollars.

“Many media commentators have been wondering what impact these currencies will have on retail payments and even on central banks,” he said. “I agree that virtual currency schemes are an interesting phenomenon and should not be ignored or dismissed.”

A year and a half after the above report, this is really the first we’ve heard from the ECB on digital currencies.

"In Europe, virtual currencies do not pose a risk to price stability or financial stability, but do pose a risk for users,” Mersch continued. “However, this user risk is more related to speculative investments and consumer protection, and not necessarily to payments.”

Here is the full text of Mersch’s statement on so-called virtual currencies, as part of a larger speech on retail payments:

“Finally, I would like to say a few words on virtual currency schemes. Bitcoin is perhaps the most notable and topical of these, but certainly no longer the only one. Many media commentators have been wondering what impact these currencies will have on retail payments and even on central banks. I agree that virtual currency schemes are an interesting phenomenon and should not be ignored or dismissed. The ECB was one of the first public authorities to see their potential and their risks and published a detailed analysis in 2012. Despite the overall rise in the value of bitcoin since the publication of the report and the media attention it is getting, our conclusions still seem to be valid, namely, that such currencies are not (at least yet) economically important. In Europe, virtual currencies do not pose a risk to price stability or financial stability, but do pose a risk for users. However, this user risk is more related to speculative investments and consumer protection, and not necessarily to payments. Nevertheless, we are closely following developments and keeping in touch with other authorities.” (Source)